The objective of this article is to understand what are ICOs to learn to participate in an ICO. You’ve come to the right place to find out everything you need to know about ICOs. Have a good reading!
First, what is an ICO?
When you believe in a concept to be successful, the best way to get a return on your investment is to invest first, because when everyone is interested in the project in question, the respective currency will increase in value and your return on investment will be reduced.
From its true name (Initial Coin Offering), the ICO is a fundraising in the form of currencies for which the financed project in question distributes you tokens intended for the operation of the project in exchange. This fundraising method is the best way to finance a project up to several million euros within a few days.
Its effectiveness on the cryptos market has been so successful that the number of fundraising events reached its peak in April 2017 with a total of more than 3.5 billion dollars raised in just one year. To help you understand the exponential growth of these, in 2016, only 50 ICO’s were created. In 2017, we are talking about 902 ICOs and in 2018, more than 2500 ICOs were carried out, or an ICO every 3 hours on average. Having surpassed all investors’ expectations and because of their very high returns on investment, ICOs have become very popular and have become the main fundraising method for companies.
However, the reputation of ICOs has rapidly deteriorated since the increase of scams project, which has had a significant impact on the number of investors in 2018. An ICO offers the possibility to buy tokens before the listings on the trading platforms, which allows to acquire the tokens at the price initially determined at the beginning of the project. This is the best way to make your investment profitable. For example, the IOTA has made it possible to multiply the initial investment by more than 500 in less than 2 years. So, are you still seduced by your life insurance? ICOs are not the universal solution, because among the 2500 ICOs in progress, you could have invested in a scam and lose your entire investment.
Does this mean that the majority of ICOs are scams?
In 2017, more than 200 ICOs were able to collect more than 3 billion euros, or 25% of the ICOs. Are the remaining 75% scams? The answer is obviously NO! Indeed, the current economic context does not encourage anyone to invest in any project. As you read this, you realize what $3 billion means to the lucky 200 elected officials. On average, this would mean that each of the projects would have raised more than $17.3 million in a few weeks. You will therefore understand that the remaining 600 projects will not be eligible for any funding. Of course, the case is more complex than that, because among the remaining projects, we find scams, failures corresponding to companies that have raised insufficient funds during their fundraising campaign, and semi failures represented by the death of projects due to the lack of involvement of project teams or community. But I wanted to simplify the illustration to send a message. Former broker Jordan Belfort, known since the release of the film “The Wall Street Wolf”, said in a financial Times article that the vast majority of ICOs were honest, but that a small proportion trying to rip you off would be enough to destroy the reputation of ICOs. As a result, even though the number of ICOs almost tripled in 2018, the amount of harvest has dropped considerably, resulting in a loss of investor confidence in ICOs and increased difficulty in finding good deals. Vitalik Buterin, the creator of the Ethereum, the main cryptocurrency needed for the ICOs, said that in 2017, we were experiencing a speculative bubble resulting from a conflict between people wishing to change the world through the blockchain and others considering this technology as a way to raise more funds than they could ever do through traditional financing methods. This only reinforces investors’ mistrust of ICOs.
This does not mean that it is no longer possible to earn money because many projects are still destined to succeed. However, you will need to be cautious to succeed in your investments.
That is why I ask you to remain measured and always invest the money that you can afford to lose because you are responsible for your actions and must assume the consequences. In order to enter this volatile market with confidence, I strongly advise you to take a step back before investing and train yourself on the subject. This will allow you to first understand how scams work and thus avoid falling into traps that are unfortunately becoming more and more sophisticated.
In the next articles:
- We will explain how to properly analyze ICOs to distinguish honest projects from scams.
- In the next article, we will illustrate in picture form how to participate in an ICO and outline the CIA’s commands for success in the ICO world.
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